What makes this an endogenous growth model

Reference no: EM131134335

Consider an economy whose production function is

Suppose that it has a saving rate of .1, a population growth rate of .02, and an average depreciation rate of .03 and that θ =.5.

a. Reduce the production function to the form y ak . What is a ?

b. What are the growth rates of output and capital in this model?

c. Interpret a . What are we really saying when we assume that the labor-augmenting technology, A , is proportional to the level of capital per worker?

d. What makes this an endogenous growth model?

Reference no: EM131134335

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